TAX GUIDE

UK dividend tax rates for 2026/27.

Dividend tax went up on 6 April 2026 for basic and higher rate taxpayers. This guide sets out the rates, how the £500 dividend allowance works, how your salary decides which band your dividends fall into, and when you need to tell HMRC.

Figures for the 2026/27 tax year · Last reviewed 21/10/2026

The dividend tax rates for 2026/27

These rates apply from 6 April 2026 to 5 April 2027. They apply to dividend income above your Personal Allowance and the dividend allowance.

Basic rate: 10.75%. On dividends that fall in the basic rate band.
Higher rate: 35.75%. On dividends that fall in the higher rate band.
Additional rate: 39.35%. On dividends that fall in the additional rate band.

The dividend allowance is £500 for 2026/27. Shares held in an ISA are outside all of this. You do not pay tax on dividends from shares in an ISA.

What changed from 2025/26

The basic and higher rates each rose by 2 percentage points. The additional rate and the allowance did not change.

Basic rate. 8.75% in 2025/26, now 10.75%.
Higher rate. 33.75% in 2025/26, now 35.75%.
Additional rate. 39.35% in both years.
Dividend allowance. £500 in both years.

If you are a director who takes most of your income as dividends, this is the change that will show in your tax bill for 2026/27. The first year it affects is the return due by 31 January 2028.

How the bands work with your other income

Dividends do not have their own bands. HMRC's guidance is to add your total dividend income to your other income, such as wages, to work out your tax band. In practice your other income uses up the Personal Allowance and the bands first, and your dividends sit on top.

The Income Tax bands for 2026/27, with the standard Personal Allowance, are:

Personal Allowance. Up to £12,570, taxed at 0%.
Basic rate band. £12,571 to £50,270.
Higher rate band. £50,271 to £125,140.
Additional rate band. Over £125,140.

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. It is zero once your income is £125,140 or more. So a large dividend in one year can cost you some or all of your allowance as well as being taxed at the higher rates.

The £500 allowance still uses up your band

The dividend allowance means the first £500 of dividends is taxed at 0%. It does not stretch your bands. Those £500 still count towards your total income, so they still take up space in whichever band they fall in. This catches people out when their income is close to £50,270.

If you live in Scotland

Scottish Income Tax applies to wages, pensions and most other taxable income. It does not apply to dividends. GOV.UK confirms that people in Scotland pay the same tax as the rest of the UK on dividends and savings interest. Your salary is still taxed at Scottish rates, though, so speak to whoever prepares your return about how the two fit together.

Worked examples

These examples are made up to show how the sums work. They assume the standard Personal Allowance, no other income, and someone who lives in England.

Example 1: wages plus a small dividend

Sam earns £29,570 in wages and receives £3,000 of dividends from shares, outside an ISA. Total income is £32,570.

The wages use the £12,570 Personal Allowance, and the remaining £17,000 of wages is taxed at 20%. The first £500 of dividends falls in the dividend allowance and is taxed at 0%. The other £2,500 is in the basic rate band, so the dividend tax is £2,500 × 10.75% = £268.75.

In 2025/26 the same dividend would have cost £2,500 × 8.75% = £218.75.

Example 2: a director on a small salary

Priya owns a limited company. She takes a salary of £12,570 and £40,000 of dividends in 2026/27. Her salary uses her whole Personal Allowance, so all of the dividends are taxable income.

The basic rate band covers the next £37,700 of income (£50,270 minus £12,570). The first £500 of that is the dividend allowance at 0%. The next £37,200 is taxed at 10.75%, which is £3,999.00. The last £2,300 falls in the higher rate band and is taxed at 35.75%, which is £822.25.

Her total dividend tax for 2026/27 is £4,821.25. Under the 2025/26 rates, the same split would have been £3,255.00 plus £776.25, a total of £4,031.25. The rate rise adds £790.00.

GOV.UK has a tool to estimate your dividend tax if you want to check your own figures.

When you need to tell HMRC

You do not need to tell HMRC if your dividends are within the dividend allowance for the year. If your dividends are more than both your unused Personal Allowance and the dividend allowance, you need to report them. How you do that depends on the amount.

Up to £10,000 of dividends. If you already complete a Self Assessment return, include them on it. If you do not, tell HMRC after the tax year ends on 5 April and before 5 October. You can ask HMRC to change your tax code, so the tax comes out of your wages or pension, or contact the helpline.
Over £10,000 of dividends. You must complete a Self Assessment tax return. If you do not usually send one, register for Self Assessment by 5 October after the end of the tax year.

Self Assessment deadlines for dividends

Dividends for 2025/26, the year that ended on 5 April 2026, go on the return with these deadlines:

5 October 2026. Tell HMRC if you need to complete a return and have not done one before.
31 October 2026. Paper returns must reach HMRC by 11:59pm.
30 December 2026. Online returns, by 11:59pm, if you want to pay your bill through your tax code.
31 January 2027. Online returns and payment of the tax you owe, both by 11:59pm.
31 July 2027. The second payment on account, if you make payments towards next year's bill.

Dividends for 2026/27, taxed at the new rates, go on the return due by 31 January 2028.

Dividends from your own limited company

If you run a limited company, the rates above are only half the picture. The company also has rules to follow before it pays you.

Profits first. Dividends come out of profits. A company must not pay out more in dividends than its available profits from current and previous financial years.
No Corporation Tax deduction. Dividends are not a business cost, so they do not reduce the company's Corporation Tax bill.
Paperwork. The directors must hold a meeting to declare the dividend and keep minutes, even if there is only one director. Each payment needs a dividend voucher showing the date, the company name, the shareholders' names and the amount. Shareholders get a copy and the company keeps one.

The first rule depends on your books. If the books are months behind, nobody can say with confidence what the available profits are on the day a dividend is declared. A dividend paid without enough profit can cause problems later, both for the company and for the director who took it.

Many directors combine a small salary with dividends. Our guide to paying yourself a director's salary covers the salary side. Dividends also show up in your year-end accounts, so the paperwork needs to match what was actually paid.

Practical points for 2026/27

Check your running total. Keep track of dividends taken so far this tax year, alongside salary, so you know when you are close to £50,270.
Put money aside. Tax on dividends is usually paid through Self Assessment, well after you receive the money. Setting some aside each time you take a dividend avoids a large surprise in January.
Record it properly. Each dividend should appear in the company books with its voucher and minutes, not as a loose transfer to the director.
Get advice on the mix. The best split between salary and dividends depends on your full position. Your accountant should run the numbers for you.